Very interesting developments and as always strange bedfellows. I like the headline of the Bloomberg story but am disappointed in the opening sentence where the writer immediately tries to make it a “race” issue. It’s a human race and working class issue not a “race” issue. That aside this could be a real problem. Requiring home buyers to come up with 20% down will indeed be very challenging in many markets across the U.S. I always re-read any paragraph that states Banks are aligning with Consumer groups, as should you.

In the shadow of the sub-prime mortgage debacle that had knocked the wind out of the US and many other countries I agree there needs to be a safer more rational approach to mortgage lending. I think the problem doesn’t lie so much in the underwriting guidelines, at least in rational markets, as it does in the oversight, regulation and control of commercial banks/bankers. Let’s not treat the cough and sniffles, lets go after the real infection. Does anyone see the elephant in the room? Or have too many politicians been paid off already… This issue needs to be treated holistically. There needs to be reform and regulations with teeth. When rating agencies are concerned about getting their next opportunity to rate an investment device from a commercial bank who is paying them for their rating, well, what logic is there in that? Who is guarding the hen house? If mortgage loan underwriting guidelines were adhered to there wouldn’t have been such a collapse – call it supply and demand. I’m not in the mood to rehash the logical details right now, I’m sure I have outlined it in previous posts (or maybe I’ll do it later in a stand alone post). One of the best elements of the proposed rules is that the banks must maintain at least 5% of the crap they repackage and sell to everyone else.

OK, I caught myself, almost headed down a long negative ranting road. Let’s be positive, less emotion, more logic. Bottom line is the economy won’t pick up until people can get jobs and the majority of Americans are not going to start buying homes until banks start lending again. And guess what, banks aren’t going to lend to people who are under or unemployed. Not to hard to figure that one out. It’s a shame that we’ve been brainwashed to think we have to go to the bank and get a loan to buy a house. Of course the businessman (capitalist?) in me says this has created a lot of jobs and income for lots of people so I shouldn’t be too negative. I suspect as I slowly get older and possibly wiser I question more and more how we are “trained” to think and how individual critical thinking has pretty much disappeared. This probably infuriates me even more as I am a product of this mindset and catch myself, too often in hindsight, realizing an opportunity may have been missed as there is often more than one way to solve a problem, meet a need, etc.

Wake up America! Exercise the good sense the good Lord has given each and every one of us. Treat others as you would have them treat you, don’t take advantage of people when they are down. I realize that’s a fine line between a great opportunity and taking advantage but situations and circumstances don’t just happen randomly, even this rant probably has a higher purpose than I meant it for. I feel the need to go find some good to compliment so it’s off to the real world and actually talking to people. Here is the link to the full Bloomberg story inspiring this creation: